The hosts were hoping for a comfortable win to mark Cristiano Ronaldo's 100th cap, but were instead made to fight for a 1-1 draw at Porto's Dragao Stadium.
Niall McGinn's 30th-minute effort set up the prospect of a giantkilling act to rival the famous wins over Spain and England under Lawrie Sanchez, only for Helder Postiga to equalise with little more than 10 minutes left.
The exact nature of the performance is not one O'Neill would be eager to see on numerous occasions, with his side pinned back in their own half for the vast majority of the game and forced to summon a colossal defensive display to stay in contention.
But the qualities that underpinned it - commitment, passion and unity - left him sure there will be more enjoyable results in the future.
"This is a team that is in its infancy in many ways, it's a transitional period for us, so to see them play with that spirit and discipline makes me immensely proud," O'Neill said.
"We have experienced players but also young and inexperienced players at club and international level, but we've done a lot of work and you've seen it pay off.
"This is a group who want to learn and progress and have nights like this, to perform for Northern Ireland and make people proud of them again."
Northern Ireland went into the game on the back of a frustrating 1-1 draw of their own, against Luxembourg last month.
That raised questions about the team's ability to close out results, but O'Neill feels they provided a perfect answer on this occasion.
"We said before the game that the most important thing was not to let anyone question their character," he said.
"They certainly did that from one to 11, and there are also lads who didn't get involved in the match who have worked hard all week too.
"It was a huge success for us and hopefully a step in the right direction."
O'Neill was not short of individuals to praise, from the sturdy Roy Carroll in goal to the tireless work of full-backs Ryan McGivern and Aaron Hughes.
Oliver Norwood also belied his relative inexperience to turn in a composed performance in central midfield, while McGinn produced a fine finish for his first international goal.
But Manchester United's Jonny Evans was the standout performer and earned a special nod from his manager.
"Jonny looked like a player worthy of being in any team out there," O'Neill said. "I've had Jonny for four games and to be fair he's been a joy to work with.
"His approach to the whole thing has been great, he's really grown into it.
"He is going to be a leader of men and a leader of this team. I've seen it recently with Manchester United and times here the leadership qualities he showed were fantastic."
With two points from their first three Group F matches, Northern Ireland's World Cup qualification campaign continues next month with a home clash against Azerbaijan.
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